The Real Estate Beginners Guide to Contract Assignment in 2025
In real estate investing, not every buyer intends to hold or close on a property themselves. Sometimes, the value lies in securing a deal and then transferring that opportunity to another investor. This process is called contract assignment.
A contract assignment allows one party (the assignor) to transfer their rights and obligations in a purchase agreement to another party (the assignee). Instead of closing on the property, the assignor profits from assigning their interest, often in the form of an assignment fee.
This guide explains what contract assignment is, how it works, its benefits and risks, and why it has become such a popular tool among real estate investors in 2025.
What Is Contract Assignment?
A contract assignment in real estate is the transfer of contractual rights and duties from one party to another before the deal closes.
Assignor: The original party (often a wholesaler or investor) who secured the property under contract.
Assignee: The new party who takes over the contract, assuming the right to buy the property under the agreed terms.
This strategy is widely used in wholesaling real estate, where investors find undervalued properties, sign contracts, and then assign those contracts to buyers willing to close.
How Contract Assignment Works
Property Under Contract: An investor (assignor) negotiates a purchase agreement with a seller.
Assignment Agreement: The assignor enters into a separate contract transferring their rights to another buyer (assignee).
Assignment Fee: The assignor typically collects a fee for transferring the contract.
Closing: The assignee closes on the property under the original terms, fulfilling the contract obligations.
Example of Contract Assignment
An investor contracts to purchase a distressed home for $150,000.
They assign the contract to another buyer for $160,000.
The assignee pays the seller $150,000 at closing, and the investor collects a $10,000 assignment fee.
Why Contract Assignment Matters
For Investors: Provides a way to profit without financing or holding properties.
For Buyers: Gives access to pre-negotiated deals.
For Sellers: Still achieves a sale, though sellers must consent to assignment terms.
Benefits of Contract Assignment
Low Capital Requirement: Investors don’t need large sums to close deals.
Quick Profits: Earn money through assignment fees without property ownership.
Market Flexibility: Allows investors to profit in competitive or distressed markets.
Exit Strategy: Provides options if the investor doesn’t want to or can’t close on the property.
Risks and Challenges
Seller Restrictions: Some contracts prohibit assignments.
Legal Issues: State laws regulate assignments differently; noncompliance may void the deal.
Market Risk: If no assignee is found, the assignor must either close themselves or risk breach of contract.
Reputation Concerns: Poorly managed assignments can harm credibility with sellers and buyers.
Contract Assignment vs. Double Closing
Assignment: The investor never actually owns the property; they sell the contract.
Double Closing: The investor purchases the property first, then immediately resells it to another buyer.
Assignments are simpler and less costly but may be restricted by sellers or lenders, while double closings provide more privacy on profits.
Contract Assignment in 2025: Current Trends
Wholesaling Popularity: Assignments remain a top strategy for new investors entering real estate.
Legal Scrutiny: Some states are tightening regulations to protect sellers from predatory practices.
Digital Platforms: Online marketplaces now facilitate contract assignments between investors.
Transparency: Buyers and sellers are increasingly demanding full disclosure of assignment fees.
Frequently Asked Questions
What is a contract assignment in real estate?
It’s when a buyer transfers their rights and obligations under a purchase agreement to another party.
Is contract assignment legal?
Yes, but it must comply with state laws and the original contract’s terms.
Do all contracts allow assignment?
No, many contracts include a “non-assignable” clause unless both parties agree.
How do investors make money in contract assignments?
Through assignment fees paid by the assignee.
Can a seller refuse an assignment?
Yes, if the contract prohibits assignment or if they don’t consent to changes.
What happens if no assignee is found?
The original buyer must close or risk breaching the contract.
How much are typical assignment fees?
Fees vary but often range from $5,000 to $20,000 depending on deal size.
Is contract assignment the same as wholesaling?
Yes, contract assignments are the core mechanism behind wholesaling real estate.
Are assignment contracts risky for sellers?
Not usually, as sellers still receive the agreed purchase price, but they may worry about delays.
Do lenders accept contract assignments?
Some lenders prohibit them, especially in mortgage-financed deals.
Related Terms and Concepts
Assignment Fee: Payment to the assignor for transferring the contract.
Wholesaling Real Estate: Strategy relying heavily on contract assignments.
Double Closing: Alternative to assignments involving back-to-back transactions.
Earnest Money Deposit: Funds showing commitment in the original contract.
Purchase Agreement: The original contract being assigned.
Wrap Up – Contract Assignment in Real Estate
A contract assignment allows investors to profit by transferring their rights in a real estate contract to another buyer. It’s a powerful tool for generating income without heavy upfront capital, making it popular among wholesalers and new investors.
However, it carries risks: sellers may prohibit it, assignees may fall through, and legal restrictions vary by state. In 2025, transparency, digital platforms, and tighter regulations are shaping how assignments are executed.
For investors, mastering contract assignment means balancing opportunity with compliance, ensuring that every deal benefits all parties involved.
